Kotak Mahindra Bank (KMB IN) – Q3FY26 Result Update – Incremental stress reducing as envisaged – BUY
Published on 25 Jan 2026
KMB saw a good quarter; core PAT beat PLe by 2.3% owing to better asset quality resulting in lower provisions. NII/NIM was a tad higher despite drag of increased liquidity (4bps impact). SME, BuB, housing and corporate continue to remain asset growth drivers. As expected, unsecured stress in reducing which has contributed to consistent decline in credit cost from 115bps in Q1FY26 to 73bps in Q3’26. Led by strong capital adequacy (21.5% CET-1) and comfortable LDR (85-87%), KMB is well poised to deliver above system level credit growth of 15-18% over the medium term (we are factoring 16% CAGR). Acceleration in loan growth and decline in credit costs remain key levers to re-rating; assuming stable interest rates, NIM and credit costs can surprise positively. With core RoA of 1.9% in FY28E, KMB remains of our preferred picks. We keep multiple at 2.3x on Sep’27 core ABV with a TP at Rs500. Retain ‘BUY’.
